IATA warns on airline profits and carbon offsets

Slowing passenger demand and rising costs are set to pull airline profits back this year, IATA has warned.

Profits will decline to $28 billion in 2019 from $30 billion last year, predicts the airline association’s director general Alexandre de Juniac.

“The trend is more in the decreasing mode than the increasing mode,” says de Juniac. “A big uncertainty is the oil price.”

Singling out air cargo in particular, he notes that demand was 3.2% weaker in July 2019 than in the same month last year.

He was speaking on a press call to mark the 40th Assembly of the International Civil Aviation Organization, which is convening today in Montreal.

Foremost among IATA’s hopes for the assembly is encouraging ICAO member states to back a market-based industry effort to combat climate change, namely the Carbon Offset and Reduction Scheme for International Aviation (CORSIA).

Three years ago, ICAO member states agreed to implement CORSIA, which is a mitigation programme for the industry. During the 40th assembly, IATA is pushing states to reconfirm their commitment to “stick to the principle that aviation’s international emissions should be accounted for only once, with no duplication”.

This has run into opposition from the EU and several European countries, who are looking to enact their own market-based policies to reduce carbon from the sector in addition to CORSIA, such as the emissions trading system.

De Juniac warns that these efforts risk undermining the scheme: “The strength of CORSIA is that it is to be applicable everywhere in the same way… If states take unilateral measures… it will unbalance the program,” he says, identifying a risk the industry could suffer double charging in some jurisdictions.

“There is a single programme. We should abide by the single programme full stop,” he says.

De Juniac also notes that the industry has already made large strides in its efforts to combat climate change.

Having brought in the first measures to combat carbon emissions around 10 years ago, the industry is making more progress than expected, he argues.

Although overall emissions are rising, he notes that per-passenger they have fallen by 3-4%, against an expected level of 1-2%.

IATA hopes that by 2050 airlines will emit just half the carbon that they did in 2011.

Willie Walsh, the chief executive of British Airways parent IAG, has disclosed that the group is considering legal action over the UK government’s mandatory two-week quarantine for travellers arriving in the country from 8 June.

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